The year 2008 was a historic one for Bhutan, which on March 24 held its first democratic elections for the lower house of the parliament and thereby transformed from an absolute monarchy to a constitutional democracy. In the election more than 250,000 voters cast their ballots, and the Bhutan Peace and Prosperity Party (DPT), led by Lyonchen Jigmi Thinley, won 45 seats, while the People’s Democratic Party (PDP) captured 2 seats. Thinley was sworn in as prime minister on April 9. On July 18 Bhutan promulgated a new constitution. The transition to democracy was initiated by former king Jigme Singye Wangchuk. In 2006 he abdicated in favour of his Oxford-educated eldest son, Jigme Khesar Wangchuk, who would remain king in a largely ceremonial role.

Meanwhile, more than 100,000 Bhutanese, who had been forced to leave the country in the early 1990s when strict citizenship rules were enforced, were living in refugee camps in Nepal and were barred from voting. According to the International Organization for Migration, more than 3,000 refugees had been resettled in the U.S., New Zealand, Denmark, Australia, and The Netherlands.

Thanks to a boom in tourism and hydropower, Bhutan’s economic growth rate stood at 8%. Living standards were among the region’s highest, with an average per capita income of more than $1,400. Hydropower exports to India drove GDP growth to above 20% in 2007, and total exports to India in 2006–07 amounted to about $200 million. Indian Prime Minister Manmohan Singh visited Bhutan in May and addressed a joint session of the parliament.